Community as a Retail Differentiator

Phillip: [00:01:06] Hello and welcome to Future Commerce, the podcast about cutting edge and next generation commerce. I'm Phillip.

Brian: [00:01:09] I'm Brian.

Phillip: [00:01:10] And I've got a lot of background noise today because I'm in the middle of community. I'm sitting in... {laughter}

Brian: [00:01:16] Which you're going to talk about today.

Phillip: [00:01:18] I'm going to talk about community today.

Brian: [00:01:19] Half baked idea of the day. Big half baked idea.

Phillip: [00:01:22] Yeah. Giant ginormous global overarching theme that's half baked, which is basically could be the subtitle of our podcast. Actually you know what? I'm so proud of our last few episodes because we are saying things that... I mean, like, I don't know, we're saying things and we're talking about things that are not being talked about I don't think.

Brian: [00:01:47] Some of them are.

Phillip: [00:01:49] While everyone's chasing, you know, headlines and everyone's distracted by this earnings report and that acquisition and this IPO, we're actually talking, we're creating content that I feel like is somewhat evergreen in that it's important and there are broader topics, and they're not so much bound to news. And you could consume this at any time. And I feel like that's really important and differential for us. So I don't know. I'm really loving sort of the theme of where Future Commerce is right now.

Brian: [00:02:21] Yeah, yeah. And when you say evergreen, I mean...

Phillip: [00:02:26] {laughter} Nothing is really evergreen.

Brian: [00:02:27] Yeah, right? The pace of innovation as we briefly side Mary Meeker's report this past week, which we will talk about that next time. But yeah, a lot of stuff that we've been talking about for a while, which is great. But yeah, evergreen now is like, what? A year? {laughter}

Phillip: [00:02:49] Yeah. If that. I mean, some of our content has aged better than others.

Brian: [00:02:53] That's true. That's true.

Phillip: [00:02:54] If you go back to like our first few episodes, there's a few that are still very listenable and there's a couple that are talking about like WWDC of three years ago that have no bearing on, you know, our current trajectory, right? So I feel like what we were talking about, though in generalities, like if you talk about experiential retail, manufactured scarcity, second-hand commerce, ultra personalization, consumer predestination...

Brian: [00:03:25] My favorite.

Phillip: [00:03:26] Unchecked inflation, having retail renaissance, second-hand commerce... These are things that even if you go back to like deep fakes and artificial intelligence as a weapon... Those are themes that... I don't know. We're just glad handing ourselves at this point. Like we can move on. If you're new to the show, I really want to encourage you to go back and listen to the first, you know, the last few episodes, because I feel like from a thematic and content perspective, we're touching, we're using news, current events and news as like a jumping off point to talk about more overarching and broad topics. And today I really want to talk about how community impacts the world around us and how we sort of, as humans we self-organized into communities of like mindedness and that's important as retailers.

Brian: [00:04:16] First, let's hit on some headlines.

Phillip: [00:04:19] Please. No, no, no. We always do. We always do.

Brian: [00:04:21] Go ahead. We always do. That's true. Here is an interesting thing. Adidas.

Phillip: [00:04:30] Yeah.

Brian: [00:04:31] According to an article on Hypebeast... {laughter}

Phillip: [00:04:36] You're using the one that I linked, but it's actually, it was Broad Industry News from... Yeah. This is a report from...

Brian: [00:04:45] This is what happens when Phillip goes down this road. Now all of our content is just going to be derived from Hypebeast. {laughter}

Phillip: [00:04:53] Yeah, that's what's happening to me. I'm becoming a baby Hypebeast. Brand Z, Kantar Millward Brown and an ISPO report basically say that Adidas is one of the world's most valuable 100 most valuable brands, which means it's now in among the likes of Apple and Amazon and Nike and all the rest. Which is interesting because Nike at 29th place, if you are like me and your ear to the ground is in the shoe world, people that are, you know, very, very footwear conscious might tell you that Adidas has way more mindshare at this point than Nike. But Nike is infinitely more valuable of a brand and has a lot more, really is doing what footwear, they are setting the bar for where footwear should be. Just Adidas has a lot of mindshare right now, but it's interesting. This is very interesting for me. And we've had some Adidas folks on the show in the past, which is kind of an interesting thing.

Brian: [00:06:02] Yeah. Nick Vu. Yeah, that was a great episode. Actually, if you talk about episodes to go back and listen to, I would highly recommend going back and listening to the Nick Wu episode.

Phillip: [00:06:15] Yeah, for sure.

Brian: [00:06:16] Yeah, no. I think what's interesting is and this is not a knock on Adidas, and I don't think they should be worried about this. But if you go back 50 years and you look at what we consider the most valuable brands 50 years ago. There's a lot of them that don't even exist anymore, right? Or nominally exist.

Phillip: [00:06:38] Yeah. I saw a tweet recently that sort of compared the 100 most valuable brands of 50 years ago to today. And not only do almost none of the brands in the left column from 50 years ago even exist anymore, but most of them are in industries that almost don't exist anymore, right? Or have evolved so dramatically they don't really even make the same products, so they're like incredible paradigm shifts. The JC Penney's of or the Penny's of 50 years ago aren't really the same company anymore.

Brian: [00:07:20] Yeah. Yeah.

Phillip: [00:07:22] Interesting, right?

Brian: [00:07:24] Penny's, which kind of reminds me of Sears and Kmart.

Phillip: [00:07:29] Yeah, they just closed a bunch of stores.

Brian: [00:07:31] Not news. I feel like this is like how...

Phillip: [00:07:35] Not news.

Brian: [00:07:35] I feel like this always hits headlines every year for the past 15 years. I feel like there's been a headline like at least once a year, maybe like once a quarter, "Sears and Kmart close stores." Close like, you know, 50 stores or something like that. And I just don't know how they had so many stores. It just feels like they have infinite stores to close. They never stop closing stores. {laughter}

Phillip: [00:08:01] Well, you know what? What was it Alec Baldwin said in the movie? "Always be closing." They took it literally.

Brian: [00:08:09] The ABCs of Kmart and Sears.

Phillip: [00:08:15] Yeah. The ABCs of tentpole mall retail spaces, "Always be closing."

Brian: [00:08:20] I saw an article that tried to show this as evidence of the continued retailpocalypse. And I mean, let's face it, this has nothing to do with the retailpocalypse.

Phillip: [00:08:32] No. It is its own thing. I'm impressed that they still have stores left to close.

Brian: [00:08:38] Yeah, yeah. I mean, it's like the the curve that approaches zero but never hits it. It just keeps the...

Phillip: [00:08:48] The asymptote.

Brian: [00:08:48] Yes. Yes. Exactly. Yeah.

Phillip: [00:08:51] The tangent that approaches in asymptotes. Oh my gosh. That's some pretty interesting stuff there. So yeah, just coming back to Adidas.

Brian: [00:09:01] Oh yeah.

Phillip: [00:09:02] What I would like to say, though, is that to be a valuable brand, not only do you have to like, you have to have incredible innovation, and that's something that we had touched on again in our interview with Nick Vu, which is it's not just product innovation, it's also experiential innovation. And the way that they're engaging customers is fully 100 percent, one hundred and eighty degrees different. So in preparation for this episode today, let's call it brand research, I installed the Adidas app and I'll tell you my experience with their native app on Android is absolutely 100 percent different than the Nike experience. If you're comparing the two, there is no comparison because Adidas actually feels like an experience I could only have in a native app, whereas the Nike experience is basically a window into their website.

Brian: [00:10:04] It's a responsive website on download. Yeah.

Phillip: [00:10:07] Right. And you know what shoved me over to Adidas today is that I tried to buy today's 10 am drop on a Nike shoe, and I couldn't get it because it was sold out and out of stock in thirty one seconds.

Brian: [00:10:26] You just entered the world of shoes, dude.

Phillip: [00:10:28] No, I know, I know, I know, I know. But I want to point out that, you know, there was a pair that I was keeping my eyes on over at Adidas, and it pushed me into a competitive brand to sort of get the same experience. And then I realized, "Wow, Adidas actually understands customer engagement." So like, in a totally different way, they're doing it differently. And it's actually it's I don't know. It just appeals to me in a different way. And it's interesting to say that they didn't take their mobile app as a, "Let's create a gated experience so that we don't have bots purchasing our shoes and we have to authenticate these are real people that are buying real products." But instead, they said, "What if we engage this in the language of native apps that can only be expressed in a native app? And let's do it in a way that sort of doesn't replicate every feature that you've ever seen on a website, but actually approaches this as what if it's a different type of a buying experience?" And that is different, and that's how you become one of 100 most valuable brands, not just ubiquity. It's thinking about the customer experience in a different way.

Brian: [00:11:35] Yeah. Yeah, I mean, and I would argue that that's how everyone should be thinking about their mobile app. It shouldn't just be a responsive website.

Phillip: [00:11:42] Well sure. Yeah.

Brian: [00:11:42] I mean, it's a completely different medium. And so, yeah, I mean, things are going to change too with the rise of progressive web apps on the horizon, at least, maybe websites and apps will start to see a little bit more mirroring in how things work. But the thing is there's always going to be a unique experience that you can create for your customers. That's a downloadable experience, I think. I shouldn't say always. That's a dangerous word. But, yeah, I think you're right. Adidas is thinking about their market differently than Nike is, and they had to. That's the other thing. If they just copied everything Nike did and dare I speak out of ignorance, but I think they kind of did for a while.

Phillip: [00:12:46] Well they did. Well, right.

Brian: [00:12:47] Yeah. Right. I think they're like...

Phillip: [00:12:48] And they still are.

Brian: [00:12:48] Yeah, they still are to some degree. But that strategy can only get you so far. It doesn't get you on the top one hundred most valuable brands list. And so, well done, Adidas.

Phillip: [00:13:03] I mean, it's funny too, because they're staying top of mind in sort of interesting ways. I mean, like, listen, we could probably go on and on about this. I'm sure people are tired of hearing me talk about footwear. By the way, I am writing an e-book about the challenges of selling footwear online, which is part of why my mind is so deep into this world. But I think it's something that is generally accessible to a lot of people. And the fact that Adidas really kind of cornered the market in a couple really interesting ways in that they didn't only approach partnerships. Like Nike has had sponsorships down for decades. Look at Jordan as its own line. Those sponsorships and sort of their own design esthetic following in like a certain into its own like subbrands. Nike has been doing that forever, so when Adidas did it, it wasn't just looking... They looked at it differently. They said, "How can we do this differently?" And a Kanye West, like ostensibly a Kanye West partnership doesn't make a lot of sense on paper for an athletic footwear brand, but it has changed, fundamentally changed... The Yeezy brand has fundamentally changed footwear so dramatically that the design aesthetics of the Yeezy shoes are in everything now. Like everybody copies...

Brian: [00:14:28] Dude. You sound like Kanye right now. {laughter}

Phillip: [00:14:32] Wow. God, help me. Ok. But the point is that this is now a topic of conversation in that people, and I'm not saying that rappers never had, you know, partnerships with footwear brands. That's always been part of, you know, the hip hop persona. I mean, for crying out loud, that has always been part of hip hop. The point for me is that actually launching, like changing an entire industry based on a partnership in an aesthetic that comes out of it is something that doesn't happen all the time. And so you've got to sit up and notice when it does. And if you look at the design cues that a lot of the bespoke brands are following nowadays, like Allbirds, who are sort of a darling of direct to consumer right now, by the way, they're in Nordstrom, hashtag omnichannel. Those guys, you know, they look a lot like Yeezys. They just do. And not a lot of people were doing that design five years ago. And in fact, they're ramping up production now where Yeezy started out as an exclusive that were really hard to get and very expensive and sort of artificially limited and sort of a luxury good and now they're producing... The news is that they're going to be producing two million of them. This is going to become a massive consumer brand.

Brian: [00:15:50] Yeah. No, I mean, it already has. It's interesting. I do want to point something out. I think that other brands have tried to do what Adidas did. I don't want to just say, "Oh yeah, if you're a brand, go look outside sort of the standard type of sponsorship or the standard way of thinking and just go get someone from another industry." I'm not saying, don't be creative, but be careful about how you do it. And I am a Kanye fan. I think he does think outside the box. I think he was the right artist to partner with.

Brian: [00:16:34] Right.

Phillip: [00:16:34] And so I think this is the other thing. When you're going to do things like this and you're really getting outside the box and you're trying to take your brain to another level or get outside of just copying your competitor make sure where you go, you're getting the right group or person and you're thinking of... Kanye is a phenomenal content creator. And so it was the right kind of play. They didn't go partner with Pharrell. That would have failed.

Phillip: [00:17:13] While Adidas is partnered with Pharrell. I'm actually wearing Pharrell.

Brian: [00:17:18] Now. Now.

Phillip: [00:17:18] I know. Not to start. Right.

Brian: [00:17:21] If that had been the first one they partnered with it wouldn't have worked.

Phillip: [00:17:25] Right. But Pharrell, ok, you're now verging on the thing that I really wanted to talk about, which is access into communities.

Brian: [00:17:33] Yes.

Phillip: [00:17:33] I mean, that's really what it is. Pharrell doesn't have the community that that Kanye West does. There was a community, a natural community that Kanye was fostering and a following of people that they had access into with that partnership. And I feel like creating communities is really what partnerships should be about is access into a joined, shared experience of community that you can express through a partnership that you wouldn't reach otherwise.

Brian: [00:19:50] Let's be really bold here. I'm so tired of us talking about things like markets. Let's talk about communities now like why are we continuing to use terms that were invented by business people back in the sixties to address things that...

Phillip: [00:20:15] The 1860's.

Brian: [00:20:15] Yeah. Right. Well, marketing as a concept... Modern marketing as it exists today kind of took off in the fifties, sixties, right?

Phillip: [00:20:24] Fifties, sixties...

Brian: [00:20:24] Fifties, sixties, maybe, maybe earlier than that. Maybe I'm showing my ignorance here. But like my point is, we're using terms and we're using techniques and we're using thought processes that were developed a long time ago.

Phillip: [00:20:37] There's a vernacular or a taxonomy that we've adopted that actually kind of it cheapens the evolutionary human trait of community building.

Brian: [00:20:47] Exactly.

Phillip: [00:20:48] Right? So actually, the thing that piqued my interest here was there was a news article about Reddit becoming the number three most visited site in the United States outside of Google and Amazon. And I started thinking about what that means and how they could overtake Facebook and how loosely organized their communities are compared to the brand cachet of something like Facebook, where lots of people are drawn to Facebook to engage with Facebook itself or to engage with their social circle, but they see that as a Facebook engagement, a Facebook experience. Whereas Reddit, those communities actually see themselves as communities and they're not engaging with Reddit, they're engaging with each other. I feel like that's really interesting. It got me thinking about how in commerce we find we do the same thing and we have for a long, long time. In the analog business world we've had leagues of businesses and, you know, and chambers of commerce and ways for people to have shared ideas and shared experience, shared spaces, marketplaces, right? We've had those contexts for a long time, and we're recreating them block by block in the digital space. So I wanted to unpack that a little bit about how we sort of tend to self organize as humans and how commerce can be furthered by sense of community.

Brian: [00:21:58] Yeah, I think this is a really big idea, and we've touched on it a little bit before, and we're both coming out of a very strong community, right? The Magento community is where we have our roots. The Magento community is a really, really passionate community. So I think we've been able to see the effect of a passionate community on a company, on a series of companies. It has like this spiraling outward effect, right? [00:22:34] Communities that are passionate have an effect on so much more than just themselves. [00:22:43] And so what does that mean for commerce, right? And I think this is our big sort of half baked idea of the episode. Let's riff on this for a couple of minutes, at least.

Phillip: [00:22:58] Mm-hmm. Yeah, that's the idea. So sorry, go ahead.

Brian: [00:23:03] No, no, no. So, you know, I think as we as digital commerce marketers and as merchants looking to figure out where we should head next with our technology and with our dollars, I think now the play isn't necessarily betting on the strength of a business just because of it's dollars that are behind it necessarily. It's betting on the businesses and the places where there are big communities, right? The strength of community is actually a better measure of success than of dollar figure behind something.

Phillip: [00:23:54] Yeah, 100 percent. Well, and but to be honest with you, if you're... Let's go back 15 years or more. And if you look at RedHat, community building can be an incredibly lucrative financial upside, right? Having a community that's passionate about a product or support of a product, especially in the open source world, can have incredible business benefit. Enterprise Linux is ubiquitous. In fact, Amazon Web Services wouldn't exist without it, without Linux, right?

Brian: [00:24:28] Right.

Phillip: [00:24:30] And so there are outgrowths of ubiquity in the things that come out of community. I think from a retail perspective, if you even look at, think back about a couple of the security issues that we've had that have been major headline news. Almost all of them are because their eCommerce or digital security concerns that are outgrowths of issues in pervasive, widely adopted open source projects. So there was the Heartbleed issue a few couple of years ago. Heartbleed effectively, and there's more than just Heartbleed, but that's a really good example. It's because there was a pervasive issue in a package called Open SSL, which is in everything. It's in every MacBook has an open SSL package in it, every website that you transact with if it's a secure connection is running open SSL and so it's so pervasive and that community building has a real commerce impact. So [00:25:45] it's not just about partnerships and community and how we sell products, it's the foundations, the plumbing, the infrastructure on which we're building is itself built on community, whether you intentionally have done that or not. [00:25:58]

Brian: [00:25:58] Yeah, a lot of what we've done on the web is, I would almost say, the web does not exist without communities. It does not exist.

Phillip: [00:26:10] Right. It's interesting how it goes in cycles, too, because I think the early adopters of the web self-organized into communities that were enthusiastic about it. Think about the old BBS's. Right? Were you around in those days for bulletin boards?

Brian: [00:26:24] I was like, 10.

Phillip: [00:26:27] Ok. {laughter} So I'm not that much older than you, but I remember those dial up BBS services.

Brian: [00:26:32] That's the thing. These things came through quickly, right?

Phillip: [00:26:35] Yeah.

Brian: [00:26:37] Five years later, when I was 15...

Phillip: [00:26:42] You know, it's funny. There was a company who sort of came through the nineties. And there's this great story that I'd have to dig up a little bit. But there's this company called XNO Communications, which was like a fiber backbone company, but they got their start... Their founder a number of years ago was a fan of BBS, like bulletin boards, and worked for Payless shoes, so the story goes and he was working as a retail salesperson at a Payless shoes developed this idea that, "Man, it would be so much easier if I could put some of this dial up equipment for my local BBS into a utility closet, not at my house. So he went around to all the Payless shoes and started a business installing like BBS dial up access into Payless shoes and from there actually grew a public company. But for him, it was just out of a passion of wanting to community build and in his context, his retail context, he was using his access into unused space and leasing space. And I feel like that's an innovative use of retail space, something we all probably understand more to this day. But for him, it was about building community, not building a public company. And that grew into one of the largest fiber backbones in the United States that Google and Microsoft and a lot of others through the 90s and early aughts, leased a lot of bandwidth from which which is huge.

Brian: [00:28:26] Right. I think as businesses go to look at social, right, we talk about social like it's this thing, right? If you're approaching social like you need to figure out how to make something go viral or be responsive to things, and I'm not saying you shouldn't be responsive, and I'm not saying getting viral isn't a good thing. Those are all good things. But a sustainable social strategy has everything to do with communities, right?

Phillip: [00:29:01] Yeah.

[00:29:01] So yeah, I think what we're getting at here is, communities play into almost everything that we do as businesses. If you don't have... Like [00:29:16] a strategy without thinking about communities, is a failed strategy,  [00:29:21]even if you look at logistics and and like supply chain, and if you're not thinking about how what you're doing has an effect on communities that are providing these goods to you and maybe not logistics, but like at least supply chain and where you're sourcing things from, you're not going to have a sustainable strategy in the long term. Maybe you'll see some short term success, but I think it's been proven over and over. If you're putting too much of a burden on any given community, you're not going to be able to sustain it.

Phillip: [00:30:11] Let me ask you this, then what are some concrete ways of actually, you know, healthily engaging and trying to foster creations of communities?

Brian: [00:30:19] First of all, you actually have to understand what they care about, and you probably should care about it, too. Or if you don't personally care about it, you should probably find someone that does. So engaging communities has a lot to... Empathy is a good starting point. You know what we should do, Phillip? I think this would be really amazing. We should have someone on who is a real community builder. I'm thinking like a Sherry Roadie or someone who we know that's done a very, very good job of encouraging community and thinking about community and building community. And maybe talk about like it doesn't have to be necessarily commerce focused, but somebody that we could have sort of like talk about how it could impact commerce more.

Phillip: [00:31:14] You know, I think one of the anti patterns for building community, though, is when you try to control it.

Brian: [00:31:19] Yes.

Phillip: [00:31:20] When you're trying to control the message, when you're trying to control the conversation you've lost the community. The community should be the one guiding that conversation and you should be open to listen. So as a retailer...

Brian: [00:31:35] So listening.

Phillip: [00:31:38] I think that's key, right? My concern would be that a retailer takes away the... They walk away and say, "I need to create a Facebook group where people can chat," or "I need to send a survey and ask my customers what it is they like about my products." [00:31:53] I think the right way to community build is to give people an opportunity to get together. [00:32:01] I think back to this product, I had a podcast, a live podcast, at Ponce City Market in a modern day marketplace called Citizen Supply in cooperation with MailChimp. And if you want to listen to that, it's over at Podcast.SomethingDigital.com. And we had three retailers who are community builders, and they are people who you would never expect that would be community builders. This one company is called King of Pops. They make popsicles, right? But their strategy for evangelizing their brand and for selling is not just to be in Whole Foods, that's one part of their strategy, but part of their strategy is they're going to be at every single music event in Atlanta that happens in 2018. So they're going to have carts out there and people will congregate around their carts and eat their popsicles and have opportunities to meet each other. But they're using popsicles as one vehicle to create an opportunity for people to share moments together. And I think we as retailers have to think like that. [00:33:10] What can we do with our product to create opportunity for people to meet each other and have genuine conversation? [00:33:16]

Brian: [00:33:16] So that means being at places where people are gathering or creating opportunities for them to gather. I think both are important.

Phillip: [00:33:24] Yeah, and that's it, too. Or at least some shared point of reference. So another person on that panel was a guy named Chuck Reese, who was from a journalistic, like a blog called Bitter Southerner, where it's basically like a journalistic entity. They write opinion pieces and the way they engage in commerce is through T-shirts and that sort of various, you know, brand affinity sort of apparel. But Bitter Southerner has attracted sort of the millennial, you know, bitter person from the deep South who's kind of tired of being a caricature with a weird southern accent, that they have real thoughts and opinions, and they're associating with the Bitter Southerner brand as a voice that's giving them a voice to say that "We're being portrayed in a way that's antithetical to our actual values." And I think that's really interesting because when you wear a T-shirt that says, "I affiliate with this Bitter Southerner brand," you're saying something about yourself, and it creates more conversation opportunity. So think about that, right? Think about the context that your brand brings. It's not just about, "I'm Adidas and I wear Yeezys." It's about the opportunity that owning a pair of Yeezys might opt you into having conversations you wouldn't have otherwise. And if you can tell that story as a brand, I think you'll be successful in community building.

Brian: [00:34:59] Good stuff.

Phillip: [00:34:59] Yeah, anyway, so again, half baked, but I think it's important that we have those conversations, and I think you're right, we need to have other people on the show to talk about it.

Brian: [00:35:06] Yeah. This is so foundational to how the world works and I think how the future of retailing and building brands is so tied up in this. I think we absolutely have to have someone on to talk about this.

Phillip: [00:35:25] Yeah, that's great. You want to wrap us up, Brian?

Brian: [00:35:26] Yeah. We were trying to make this a 20 minute episode. No, we're never going to be able to do that. So well anyway, thanks for listening to Future Commerce. We always want feedback from you about today's show. So if you can, maybe put a comment in the Disqus comment box below on our website or hit us up on LinkedIn or Twitter or wherever you want to engage with us. Hit us up on email. Brian@FutureCommerce.fm and Phillip@FutureCommerce.fm. Also, don't forget to subscribe if you're not already. Subscribe on iTunes, Google Play or just really listen from anywhere that you can find us. We're pretty much everywhere. On Spotify, Google Play, Apple Podcasts and any smart speaker. Just say, "Alexa, play Future Commerce podcast," and you can find us there. So don't miss an episode. Do not miss an episode.

Phillip: [00:36:26] Awesome.

Brian: [00:36:27] Retail tech is moving fast...

Phillip: [00:36:29] And Future Commerce is moving faster.

Brian: [00:36:30] Thanks.

Phillip: [00:36:31] Thanks for listening.